10 March 2009
London — Dead Aid, a controversial new book by economist Dambisa Moyo, argues that cutting off all non-emergency assistance to Africa within five years "would help stimulate growth".
But in countries like Zambia, the author's homeland, such a prescription could prove problematic, given the global financial turndown.
Zambia went from being a middle-income country in the 1970s to consistently appearing among the bottom 20 nations on the UN Development Programme's Human Development Index from 1990 onwards, in spite of receiving over US$10 billion in development assistance between 1990 and 2005 - equivalent to 23 percent of GDP over the same period.
It is statistics like these that drove Moyo, a former World Bank consultant and debt capital market analyst for Goldman Sachs, to write Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa.
"Growing up in Zambia, and then coming abroad and seeing that the world seemed to be moving along and growing very rapidly, yet every time I went home - year in, year out - things were getting worse. To me, this was an ongoing recognition that aid just wasn't working."
Problem or solution?
Moyo argues that rather than bilateral and multilateral aid being part of the solution, they are in fact part of the problem. "The two goals of aid are to stimulate higher growth and reduce poverty. Yet what has happened is that despite the trillion dollars of aid that has gone to Africa in the past 60 years, you've seen a decrease in growth and an increase in poverty," she told IRIN.
"You essentially have a problem whereby African governments are getting aid because they, the donors, are worried about the levels of poverty in those countries. But that aid then tends to spew out a lot of corruption, it creates a lot of bureaucracy, it kills off entrepreneurship, and it disenfranchises voters in those countries."
Moyo is not the first person to criticize the effectiveness of aid programmes in Africa; a growing number of donors are undertaking studies to investigate their real worth. In 2007, the Norwegian Agency for Development Cooperation (NORAD) released one such study: Norwegian Aid Works - But Not Well Enough.
Norwegian aid
"Norwegian aid constitutes 3 percent of the total aid to Zambia, which was equal to 0.8 percent of Zambia's GDP in 2005. Our report showed that aid is more successful when it is channelled towards technical support. So the dialogue between NORAD and Zambia has become less political and more technical," NORAD's Ase Seim, coordinator of the report, told IRIN. A follow-up report is due to be released in 2009.
An example of a technical programme was computerizing Zambia's Office of the Auditor General, which received $1.6 million between 1997 and 2008, with support for restructuring and staff training, which means there are now regular audits of government activities - making a direct improvement in governance.
The financial downturn has hit Zambia hard in recent months, with copper prices - the mainstay of the economy - dropping dramatically on the back of falling global demand. Shrinking government revenues mean less state spending.
"Right now we are doing the annual audit. However, our budget has been cut by 17 percent by the government because they have less money than last year. So, yes, we have improved our audit methodology through the creation of manuals and computerization in the past few years; in the long term we still have areas that are not fully sustainable without consistent funds," Louis Mwanga, deputy director of Planning at the Office of the Auditor General, told IRIN.
Prescription to African governments
While Dead Aid criticises bilateral and multilateral aid, it also offers some alternatives to prevailing policy, such as the increased use of global capital markets by African policy-makers to raise investment funds: Moyo does not believe that the current financial environment should be a deterrent.
Zambia serves as a good example of how Africa is being affected by the current financial situation
"In the current climate, my prescription to African governments is to focus on ensuring that when the market bounces back, which it will, then they need to be ready to go into the international marketplace to raise bonds. My view is that there is a lot of preparatory work that needs to be done to get bond ratings and to familiarize their countries with international investors."
Ghana did just that after undergoing economic reforms from 2000 onwards. However, these reforms were made possible by a period of political stability combined with support from international partners.
"Ghana showed maturity by utilizing the global bond market in the way that it did, but it could only do so because of the economic reforms that were achieved there, largely through aid. To deny this would be wrong," noted Alison Evans, programme director of the UK-based Overseas Development Institute.
"By contrast, Zambia is in no position to do the same as yet. In fact, Zambia serves as a good example of how Africa is being affected by the current financial situation: a cut in aid budgets in donor countries is set to have negative consequences, a reduction in the amount of remittances is also setting in, plus a sizable drop in commodity prices is having severe effects on the copper industry."
For low-income countries like Zambia, turning their backs on aid in favour of the capital markets in the current global recession may not be the best option.
[ This report does not necessarily reflect the views of the United Nations ]
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The problem with this article is that it assumes that all African countries have the same: problems (although we share certain common problems e.g. curroption), amount of mineral resources, man power, or political stability. Therefore, it makes it difficult for me to say that Aid should stop for all the countries in Africa.
The best way is to analyse each country individually. I know of one country I believe should stop receiving Aid and that it Nigeria. Despite any Aid received in the past, the greedy still find a way of benefiting themselves so with or without Aid the people still suffer. Besides, the country is rich in mineral resources, to the extent a former dictator, Abacha, can steal nearly 2 TRILLION DOLLARS (over half of the stimulus amount for the whole of the USA) and that is just Abacha not forgetting what his thugs stole from the Country.
With regards to war torn countries I believe what they need more urgently is military help. They need stability...
Correction I said 1 TRILLION while it is 1 BILLION but it is a lot of money anyway..
Aid as presently constituted should end, it,s not in Africa,s interest. Africa,s vast reserve of stolen funds in western banks should as a matter of urgency be returned to help with the process of national development across Africa,that,ll be more effective than the useless aid being brought in and subsequently repatriated through the back door using their equally useless N.G.O,s. KEEP YOUR AID, RETURN STOLEN FUNDS IN YOUR WATCH.
Ninety-five percent of NGOs in Africa are either EU, American or UN owned. They Channel Aid through their own NGOs. Call them Western GONGOs if you like. Apart from the WTO, IMF imbalance regulations, most of the Aid is characterised by paying huge sum of expertriate fee to their so call directors and field officers, 4x4 cars, exquisite offices or buildings around the capital and provinces and other fat bonuses.So you got to ask yourself, what or who is the Aid funding? I have a friend who always launch tirades on NGOs, he says if he becomes president, he will expel all NGOs in his country. I see reason behind that.
The west and Aid donors are both guilty as the African governments. I agree with Elly Wanda's argurement that the Aid itself is not the problem but the way it is delivered. Peace.
Time to move on is now. Anything as drastic as cutting a cleverly devised sytem of keeping Africa poor and ignorant 'AID' should definitely be cut. We are to trade with the rest of the world as partners, not as recpients of aid. We need to go to a level of partnership,were we batter or trade for goods and services startegically to better our lot. This has been a very annoying reality,that despite Africa's wealth both material and human,we still receive aid!! With regards to leadership, For heavens sake we need to immediately strengthen our resolve to ensure right leaders are elected to office and all this nonsense of short sighted, greedy ,no vision quick fix corrupt individuals who have kept us at the bottom needs to be fixed,harshly!! For God's sake Nigeria you are A SHAME to the rest of us. You should sit in sackcloth for the type of individual you have produced! Is it not better to build great institutions and grand enterprises that lasts for hundreds of generations and benefit the masses than to steal millions for selfish purposes, were has this mediocrity eminated from? The west must also own up and stop receiving stolen money!!!!!!!! Africans let us now challenge our identity and get rid of mediocre minds that are so retarded they make us poor every day! Nation building and enterprising building is now. We have something the world needs, we are not destitute. So Mr.Wanda perhaps a review of your views should be modified. We support balanced partnership not AID!
The main points are these:
Inflows of aid in hard currencies appreciate African currencies to the detriment of exports. Aid money takes brainpower away from the African private sector, that must ultimately generate wealth, occupying clever people in charities and politically-correct bureaucracy. And aid in its old-fashioned form of service delivery allows governments to leave the social sector to foreigners, concentrating their own resources on bribes, military and police to keep themselves in power regardless of their incompetence.
But some forms of aid have moved on, e.g. aid for local advocacy. This is still "neocolonial" interference, but it may produce some good...
Downsizing of the civil services have NOT made corruption endemic in Africa, on the contrary, the problem is excessive states funded by aid money.
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Active Discussions: Debate on Dambisa Moyo's Take on Aid